India’s TRAI suggests increase in spectrum cap to 35% from 25%

TRAI chairmanThe Telecom Regulatory Authority of India (TRAI) announced the spectrum cap should be revised from the current limit of 25 percent to 35 percent.

This will be a major relief for telecom operators such as Bharti Airtel, Idea Cellular and Vodafone to go ahead with their consolidation initiatives in India.

TRAI noted that the India government imposed overall spectrum cap of 25 percent at a time when there were 6-10 telecom operators in one circle. In the wake of the ongoing consolidation in the telecom sector, the number of operators has come down. At present, Airtel, Vodafone, Idea Cellular, Aircel and Reliance Jio are the active private telecom operators in India.

Reliance Communications, Telenor India and Tata Teleservices (Tata Docomo) are in the process of losing their significance in the Indian telecom market. Maxis-owned Aircel is yet to announce its future plans.

TRAI also said that the current intra-band cap should be removed. Instead, there should be a cap of 50 percent on the combined spectrum holding in the sub-l GHz bands (700 MHz, 800 MHz and 900 MHz bands).

The TRAI response came after DoT (Department of Telecommunications), through its letter dated 29 September 2017, requested TRAI to provide its views on spectrum cap for mobile operators in the country.

Government India recently constituted an Inter-Ministerial Group (IMG) on stress in balance sheet in select sectors. The IMG, among others, reviewed the spectrum cap applicable for telecom service providers. IMG, in its report, stated that the issue of spectrum cap merits detailed examination and variety inputs from sectoral regulators.

There is a cap of 25 percent of the total spectrum assigned in 700/800/900/1800/2100/2300/2500 MHz bands and 50 percent within a given band in each of the service area.

The spectrum being assigned through auction is a liberalized spectrum. At present, more than 80 percent of the spectrum held by various service providers is liberalized spectrum wherein they can use any technology of their choice in any band or using multiple bands.

As LTE device eco system is evolving in each of the spectrum band, there is no need to put spectrum cap in each spectrum band. In fact, asking a TSP to acquire spectrum in different band to deploy the same technology increase the cost of network with no real gains.

TRAI said sub-1 GHz bands are perceived as the most optimal bands to ensure availability of wireless broadband services over large areas with low population density. “Therefore, spectrum in sub-l GHz range viz. 700 MHz, 800 MHz and 900 MHz should be treated separately and special provisions have to be made to safeguard against creation of monopoly,” TRAI said.